Garuda, Boeing sign $1.6b deal for 23 jetliners

Garuda, Boeing sign $1.6b deal for 23 jetliners

JAKARTA (JP): Flag carrier Garuda Indonesia changed its 1990
jetliner procurement contract by signing a US$1.6 billion order
for 23 Boeing jets yesterday.

Garuda's president, Soepandi, said the order includes six
long-range B-777-200s and 17 regional B-737-300s and B-737-500s.

"The B-737s will be delivered between 1997 and 1999, and the
777s between 2000 and 2002. We will use the jets under lease-
operating plans with a third party," he announced at the
Indonesia air show.

State-owned Garuda originally ordered nine B-747-400s and 16
B-737-400s in 1990/1991. Of the total order, the company has
received three B-747s and seven 737s.

After a series of negotiations, Boeing and Garuda agreed to
amend the original order for one B-747-400 into five B-737-500s,
and the five B-747-400s into six B-777-200s.

The remaining portion of the original order of nine B-737-400s
has been changed into 12 B-737-300s.

Soepandi said adjustments are normal practice in the aviation
industry.

Financially-strapped Garuda was assisted by the government's
decision to take over US$700 million of its debts. The move was
part of a restructuring program to prepare Garuda for an initial
public offering in 1998.

Garuda's current fleet of aircraft is comprised of three
B-747-400s, six B-747-200s, eight B-737-300s, seven B-737-400s,
10 A-300-600s, nine A-300-B4s, six MD-11s, and five DC10s.

Soepandi said the amended order would strengthen Garuda's
current fleet, which it planed to expand in the next few years.

"B-777s are suitable for Garuda's expansion plan as the jets
are able to link Jakarta with Seattle or Denpasar with Honolulu
nonstop."

The agreement, signed by Soepandi and Boeing Commercial
Airplane group president Ron Woodard, reserves Garuda the option
to acquire six B-747-400s.

Rolls Royce, Pratt and Whitney and General Electric produce
the engines for the B-777. Garuda has not decided which company
it will use.

A senior executive of General Electric, Bruce H. Charnley,
told The Jakarta Post yesterday that the B-737 is powered by a
CFM-56/3C engine produced by CFMI, a joint venture firm equally
owned by General Electric and Snecma of France.

The B-747 can be powered by General Electric's CFG-80/C2.

"We have to compete with the other engine manufacturers in
winning Garuda's and the Indonesian government's trust to use our
engine," Charnley said.

Soepandi held meetings yesterday with General Electric and
Rolls Royce executives.

When asked for the financial details of the new order,
Soepandi replied: "We will lease the aircraft from a leasing
company. A tender for lessor qualification will be completed at
least two years before the first batch is delivered."

Last March, Garuda selected Deutsche Morgan Grenfell, a German
leasing company, to arrange the lease of six Airbus A-330-300
aircraft. The six aircraft are the first of a batch of nine
A-330-300s ordered by Garuda. The first of the A-330-300
aircraft, powered by Trent 700 Rolls-Royce engines, will be
delivered in December.

Morgan beat Chase Manhattan and HSBC of Hong Kong in the bid
to arrange the lease of the six A-330-300.

Separately at the show, Garuda signed an agreement with the
state-owned aircraft assembler PT IPTN to procure up to 20 N-2130
jets. Garuda also plans to buy McDonnell Douglas MD-11 aircraft.

Meanwhile, IPTN president B.J. Habibie, who is also the
minister for research and technology, signed agreements yesterday
with executives of Hughes Electronics of the U.S. and Daimler-
Benz Aerospace to develop a satellite-based navigation system.

The agreement, witnessed by President Soeharto, will develop a
primary means of navigation for the civil aeronautic community
and serve customers in Indonesia and the other parts of Southeast
Asia.

The system, called Aeronautic Navigation Satellite System,
will comply with International Civil Aviation Organization
standards. It will provide navigation assistance for air, land
and sea traffic.

Habibie, who celebrated his 60th birthday yesterday, refused
to disclose the value of the project or its development schedule.

"We are not developing a 'monument', but we will produce
money," was Habibie's only comment.

IPTN also signed an accord with South Korea to supply eight
military versions of the CN-235 turboprop plane. The plane was
developed jointly by IPTN and Casa of Spain.

The contract is based partly on a countertrade deal which
requires Indonesia to buy South Korean military equipment worth
up to 30 percent of the $120 million airplane contract. (icn)

Cathay Pacific -- Page 10

IPTN -- Page 11